7 minute read
FINANCING FACTS MUST KNOW’S
FINANCING FACTS MUST KNOW’S BEFORE FINANCING
By Jeremy Tsakiris – Alliance Funding
Finding the right financing is so crucial in the towing industry especially during these challenging times. Often it can make or break the cash flow and profitability of the business. With so many companies and dealer financing options out there, the industry can be enmeshing and mind boggling for owners. To bring clarity for good decision making, I am highlighting key factors that I have learned through my twenty-one years of truck-financing experience that can help guide your choice of a finance partner.
Support Availability, Not Distancing
It appears this world is trying to operate with minimal human contact. Though this may be helpful on the spread of infection, it is not helpful from a finance service-provider standpoint. Do yourself a favor and choose a partner that will answer the phone or will promptly call you back. When you are expanding your business or replacing needed trucks which have gone down, you need a finance partner that is knowledgeable, efficient and, for sure, available. Helping you to navigate quickly through processing and titling, the right support will save you needless aggravation and help your business get where you are taking it. Combine this with a finance manager whose character and experience you can trust, and your mind will be at ease. We have received feedback from repeat customers whose have experienced this:
“Jeremy is a stand-up guy and has been financing my equipment for more than seven years. I have never found anyone so willing to help the customer.” Mark Denson- Onsite Towing, Houston, Texas.
Direct Lender Over Broker
Another key factor that I have experienced is to find a finance company like Alliance Funding that is a direct lender on the balance sheet as opposed to a broker. Although a broker can
be important for lower-credit scenarios, direct lenders can offer fast processing times, more competitive products by avoiding broker margins, and have the ability to structure the lowest rates, longest terms, and a balloon-payment structure. Our goal is not just a sale for you, but a lifetime of sales earned through excellent service:
“Jeremy Tsakiris is the man. He hooked me up more than once and has definitely earned my business for life.” Trevor Sherrer –California
Collateral-Specific Financing
Equipment finance should be specific to the collateral you want to fund. This may be a confusing statement, but what I have seen through my tenure is that many banks, credit unions, or other equipment finance and capital funding companies will file a blanket lien or incumbent on the business. Alliance Funding, along with a couple of other finance companies that focus on the towing industry, will only file a lien on the title. They do not take advantage of the customer by burying the blanket lien language in the fine print.
Early Payoff Numbers at the Beginning
In same context of “buried” info, note what the real prepayment or early payoff numbers look like at the beginning of your decision making. Be specific in your questions, so you can learn what all your financing options are. A good of example of options is leasing. Most of my customers prefer to do a lease purchase for tax benefits. However, in an early buyout situation, a small penalty on the “Principle Remaining Balance” is massively more beneficial than having to pay the whole remaining schedule.
Leasing’s Tax Advantage
As some of you may know, the tax advantage of a lease purchase program far exceeds that of a traditional loan. A lease purchase program is 100% tax deductible as an expense to the company. A traditional loan is considered an asset where a standard depreciation schedule is applied. This results in a fraction of the write-off to the business.
A common misconception is that a lease-purchase program is more expensive. When, in fact, after factoring in the expense deduction, the result is most beneficial to the entity. The underwriting requirements do not differ whether I structure the agreement as a lease or a loan. Most financing companies, Alliance Funding included, can do either type of agreement. The lease purchase agreement allows for a longer balloon payment (i.e. 10-30% balloon payment). By doing this type of structure, you are simply allowing yourself more options when the term is over and giving yourself a lower monthly payment through the term. This will allow the business to have a quicker cash flow helping the monthly budget:
“Jeremy from Alliance Funding, helps my customers to whom I sell trucks by structuring their agreements with a balloon payment which helps them meet their monthly budgets.” Ed Stroth, Sales, Twin City Wreckers
In conclusion, financing equipment and trucks is a requirement for many businesses across this beautiful country. Finding a finance partner you can trust in challenging times or times of boom is crucial to the process. When that time comes, you need a partner who is not just knowledgeable and available, but who is also competitive and can approve the financing with your budget and needs in mind. We don’t just want you to survive during this time, we want you to thrive, so please contact us here at Alliance Financing by calling Jeremy Tsakiris at (603) 422-6608 or visiting us at our website at https://alliancefunding.com/ Stay safe, and God bless this great country!
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